Health Care REIT Inc.
), a real estate investment trust (REIT), reported third quarter
2012 FFO (funds from operations) of 75 cents per share compared
with 85 cents in the year-earlier quarter. The decrease in
year-over-year FFO per share was primarily attributable to
increased number of outstanding shares in the reported
We cover below the results of the recent earnings
announcement, as well as the subsequent analysts' estimate
revisions and the Zacks ratings for the short and long-term
outlook on the stock.
Third Quarter Review
Excluding one-time items, recurring FFO for the reported
quarter was 91 cents per share, compared to 89 cents in the
year-ago quarter. The recurring quarterly FFO beat the Zacks
Consensus Estimate by 2 cents.
Total revenues during the reported quarter were $474.1 million
compared to $370.7 million in the year-earlier quarter. Total
revenues for the reported quarter were well ahead of the Zacks
Consensus Estimate of $465 million.
Total same-store cash NOI (net operating income) increased
3.6% during the quarter compared to the year-ago period,
including 7.0% growth in the senior housing operating
Read our full coverage on this earnings report:
Health Care REIT Edges Past Estimates
Earnings Estimate Revisions - Overview
Fiscal earnings estimates have moved in both directions since
the earnings release, suggesting that analysts are circumspect
about the long-term performance of the company. We take a
look at the earnings estimate details.
Agreement of Estimate Revisions
In the last seven days, two out of 10 earnings estimate
revisions for 2012 have moved up, while three have moved in the
opposite direction. For 2013, the earnings estimate revisions are
fairly even, with three of the 16 estimate revisions each moving
in either direction over the same period. This indicates that
although the analysts are neutral about the long-term performance
of the company, the earnings estimates are slightly skewed
towards the negative direction in the current fiscal.
Magnitude of Estimate
Earnings estimates for 2012 have decreased by a penny over the
last seven days to $3.51 per share. For 2013, earnings estimates
have remained fairly stable at $3.91 during the same time period.
This indicates that analysts are a tad bearish about the current
fiscal, although on a long-term perspective, the analysts remain
The long-term earnings estimate picture for Health Care REIT
is neutral. Headquartered in Toledo, Ohio, Health Care REIT
invests across the full spectrum of senior housing and health
care real estate properties. The company usually has long-term
triple-net leases in senior housing and healthcare real estate
properties that insulate it from market volatility and provides a
steady source of revenue despite a challenging macroeconomic
Healthcare is also relatively immune to the economic problems
faced by office, retail and apartment companies. Consumers tend
to continue to spend on healthcare while cutting out on
discretionary purchases. The healthcare industry is the single
largest industry in the U.S., based on Gross Domestic Product
(GDP), and offers stability in a volatile market.
However, one of the biggest risks to healthcare focused REITs
is government reimbursement rates, which are proposed to be
reduced in the coming years. Deep cuts in Medicare have been
proposed over the next five years by reducing or freezing
payments to skilled nursing facilities, hospitals, and other
healthcare providers. With a large portion of Health Care
REIT'srevenues being determined by government payout rates,
forces beyond its direct control could negatively affect revenue
and operator coverage ratios.
Health Care REIT currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. One of its competitors,
) also holds a Zacks #3 Rank.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force
impacting stock prices. He turned this ground breaking
discovery into two of the most celebrating stock rating systems
in use today. The Zacks Rank for stock trading in a 1 to 3
month time horizon and the Zacks Recommendation for long-term
investing (6+ months). These "Earnings Estimate Scorecard"
articles help analyze the important aspects of estimate
revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our
proven stock ratings at http://www.zacks.com/education
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization
and other non-cash expenses to net income.
HEALTH CR REIT (HCN): Free Stock Analysis
HCP INC (HCP): Free Stock Analysis Report
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